Brunswick Corp. chairman and CEO Dustan McCoy during a conference call today announced the company’s 1st quarter earnings showed a 52 percent drop in marine sales. Brunswick’s lineup of brands includes Hatteras, Bayliner, Cabo, Boston Whaler, Maxim, Meridian, Sealine and Sea Ray.
Statistical Surveys Inc. findings for the recreational marine industry show that sales fell 47.6 percent in the 30-foot-and-up segment across all 50 of the United States in 2008. Hinckley Yachts, Mercury MerCruiser, Viking Yachts, Cummins, Crownline, Cruisers, Hatteras and dozens of other manufacturers have lain off a large part of their workforce in the last several months. Some have stopped building boats altogether.
The Megayacht market has seen its share of troubles as well. Ferretti which builds CRN, Custom Line, Pershing, Riva, Ferretti Yachts, Apreamare, and Bertram has been pulled back from the brink by Mediobanca and Norberto Ferretti himself. Derecktor Shipyards has filed for Chapter 11 and Broward Marine suspend activity at its Dania, Florida, yard.
Many of the nation’s smaller boat dealers have lost their dealership status through a combination of insufficient sales activity and not being able to finance new inventory. Four wholesale credit providers have exited marine lending, leaving only GE Financial Services. GE Financial followed by cutting back lines of credit and jacking up interest rates. This has forced many boat dealers into bankruptcy or otherwise put them out of business.
The result has been a glut of non-sold boats that have been dumped on the market by liquidators. National Liquidators, the nation’s largest marine repossession company has tripled in size over the last two years.
Given the current economic crisis there has not been a corresponding surge in used boats flooding the brokerage market as one might expect. This has come as a bit of a surprise considering the media frenzy over job losses, home foreclosures, recession woes and Chicken Little screaming that the sky is indeed falling! It seems that boat owners are choosing to hold onto their boats for longer and will continue to spend money on maintenance and improvements.
Bargain hunters have been taking advantage of the buyer’s market over the last several months. Boats that were priced well below market value have been finding new owners. The wholesale, re-possessed and retail stock is rapidly clearing the market as consumer confidence improves.
If you have been putting off a buying decision waiting for boat prices to bottom out it is time to start evaluating your options. Cut-priced retail inventory is rapidly disappearing. Boat builders are not prepared or able to replenish that supply with new stock. In fact, two years from now you will be hard pressed to even find a 2009 model boat. Distress sales of used boats are hard to come by as well. Understand that most boats valued at $300,000 and more are not owned by an hourly paid employee who can no longer keep up with the payments.
Boat prices are now at historic lows and are very unlikely to go any lower. As the supply of new and used boats diminishes with no new inventory to replenish the market – prices of used and brokerage boats are beginning to stabilize. Demand will begin to force prices closer to normal market values.
The good news is boat prices have never been better and financing is readily available for qualified buyers who can come up with 20 percent down and verify their income. The turmoil in our banking system has resulted in favorable interest rates that can be locked in for a 20 year loan.
Make your boat buying decision now while you still have plenty of options and prices are at record lows.